When limits are being withdrawn by insurers, the insured is minded to do the same. But there has been no unfair withdrawal of the cover.ĭoyne-Ditmas: It can be very difficult for insureds to justify the purchase of the whole turnover credit insurance policies which function in most part as an outsourced risk function. Of course, there are exceptions, where if the shareholding structure of the client changes, or the client is insolvent or has defaulted in its payments to the policyholder, the limits get withdrawn.
The insurer-approved limits and discretionary credit limits meeting pre-agreed criteria are guaranteed for the entire policy period.
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Select buyers underwriting is done by the insurer based on a full level of information presented to the underwriter. For well-established corporates with sound credit policy and procedures, the insurers offer non-cancellable credit limits with high discretionary self-authorised credit limits providing a greater degree of flexibility in covering fuller debtor portfolios. In this model, the insurer underwrites the policyholder and its credit management policies and procedures pertaining to its counterparty debtors/customers. Now there is a new offering model with the non-cancellable or guaranteed credit limit covers. And if a previously approved debtor counterparty credit rating deteriorates, any withdrawal or reduction in such credit limit is always done on a prospective basis, so all the trades which are undertaken up to that period are covered. Based on this credit intelligence information, if a client’s risk rating is not good, or it has financial difficulty or it has delayed payments, that’s an immediate barometer which gets reflected on the risk level appetites. This credit intelligence information forms the most value-added offering, serving as guidance to determine the creditworthiness of counterparties, and credit insurance coverage limits are set for each respective debtor counterparty.
These three players have extensive data bases of over 200 million corporates globally and over 40,000 corporates in the GCC region, which are monitored on a regular basis. The conventional model used by primarily the world’s three largest specialist trade credit insurers operating in this region, Euler Hermes, Atradius and Coface, offers three levels of service: credit intelligence, debt collection and claims payment. This is an event that took place where the market responded well.īarke: One of the key aspects is that we have the two schools of trade credit insurance offerings: the conventional offerings model and the new offerings model. It’s not a catastrophe type marketplace in the same way as a Florida wind storm. If you look at the most recent example in the structured credit and political risk market for losses, for the financial crisis of 2008 onwards, it is reported anecdotally in excess of US$2bn was paid in claims by the commercial market insurance players, which is a huge number for a specialist niche market. But what happens when the chips are down? In general, I would say insurance is great, but when it starts raining, it doesn’t work. Harriet Smith, political risk insurance broker, BPL Globalīhandari: We are always grateful for insurance.Rajesh Sethi, chief executive officer, Noor Takaful.Jules Kappeler, chief executive officer, Euler Hermes GCC.Crispin Hodges, senior executive officer, underwriter, political & contingency group, Beazley Middle East.Anabelle Everard, political & contingency group, Beazley Middle East.
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